RECTOR, WARDENS, AND VESTRYMEN OF CHRIST CHURCH CATHEDRAL OF INDIANAPOLIS v. JPMORGAN CHASE AND COMPANY et al

Filing 32

ORDER ON DEFENDANTS' 15 MOTION TO DISMISS. The Court GRANTS Defendants JPMorgan Chase and Company's and JPMorgan Chase Bank, N.A.'s, Motion to Dismiss, with leave to re-plead certain Counts: Count I is DISMISSED WITHOUT PREJUDICE as to both Defendants, with leave to re-plead; Count II is DISMISSED WITHOUT PREJUDICE as to JPMorgan Chase and Company only, with leave to re-plead; Count III is DISMISSED WITH PREJUDICE. Plaintiffs, The Rector, Wardens and Vestrymen of Christ Church Cathedral of Indianapolis, have 28 days from the date of this Order to file an Amended Complaint. Partial judgment shall not issue at this time. SEE ORDER. Signed by Judge Larry J. McKinney on 5/21/2015. (BGT)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION

RECTOR, WARDENS, AND VESTRYMEN )
OF CHRIST CHURCH CATHEDRAL OF
)
INDIANAPOLIS,
)
)
Plaintiffs,
)
)
vs.
)
)
JPMORGAN CHASE AND COMPANY,
)
et al.
)
Defendants.
)

No. 1:14-cv-01331-LJM-MJD

ORDER ON DEFENDANTS’ MOTION TO DISMISS
Defendants JPMorgan Chase and Company (“Parent”) and JPMorgan Chase
Bank, N.A. (“Chase”) (collectively, “Defendants”) have moved to dismiss Count I, which
alleges constructive fraud, and Count III, which alleges violation of the Indiana Securities
Act (“ISA”), of Plaintiffs Rector, Wardens, and Vestrymen of Christ Church Cathedral of
Indianapolis’s (the “Church’s”) Complaint on the merits; Parent has moved to dismiss all
Counts against it. Dkt. No. 15. For the reasons stated herein, Defendants’ Motion to
Dismiss is GRANTED, with prejudice in part and without prejudice in part.
I. MOTION TO DISMISS STANDARD
Under the Supreme Court’s directive in Bell Atlantic Corp. v. Twombly, 550 U.S.
544 (2007), to survive Defendant’s motion for failure to state a claim upon which relief
may be granted, the Church must provide the grounds for its entitlement to relief with
more than labels, conclusions or a formulaic recitation of the elements of a cause of
action. Id. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). The Court
assumes that all the allegations in the Complaint are true, but the “allegations must be

enough to raise a right to relief above the speculative level.”

Id. The touchstone is

whether the Complaint gives Defendants “fair notice of what the … claim is and the
grounds upon which it rests.” Id. (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).
Legal conclusions or conclusory allegations are insufficient to state a claim for relief.
McCauley v. City of Chicago, 671 F.3d 611, 617 (7th Cir. 2011). The Court may also
consider documents attached to the Complaint and documents referenced in the
Complaint, as well as take judicial notice of publicly available documents to decide the
motion. See Williamson v. Curran, 714 F.3d 432, 436 (7th Cir. 2013).
Both Counts I and III allege fraud; therefore, they are subject to the heightened
pleading standard of Rule 9(b) of the Federal Rules of Civil Procedure (“Rule 9(b)”).
Schleicher v. Wendt, 529 F. Supp. 2d 959, 961 (S.D. Ind. 2007). Rule 9(b) states: “In
alleging fraud or mistake, a party must state with particularity the circumstances
constituting fraud or mistake.

Malice, intent, knowledge, and other conditions of a

person’s mind may be alleged generally.” To allege fraud with particularity, the Church
must allege “the who, what, when, where, and how: the first paragraph of any newspaper
story.” United States v. Lockheed-Martin Corp., 328 F.3d 374, 376 (7th Cir. 2003) (citation
omitted).
II. FACTUAL ALLEGATIONS
The factual allegations in the Complaint follow.
In his Last Will and Testament, Eli Lilly created three trusts for the principle benefit
of the Church. Compl. ¶¶ 34-35. The three original trustees were Merchants National
Bank & Trust company of Indianapolis, Indiana National Bank, and American Fletcher
National Bank and Trust Company. Id. ¶ 35; Dkt. No. 1-1, Last Will & Testament of Eli

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Lilly (“Lilly Will”), at 10. At the time the Trusts were created, banks had separate trust
departments that were conservative and were required to adhere to very strict guidelines
for management of a trust. Compl. ¶¶ 38-39. The Lilly Will directed each trustee to invest
and reinvest property and to regularly distribute income to the church for the purpose of
allowing the Church to carry out its religious, charitable and educational purposes. Dkt.
No. 1-1, Lilly Will at 11.
The Lilly Will further provided:
The Trustee shall at all times have the right to . . . deal with any and all of
the securities and other property, personal or real, with the same freedom
that an absolute owner of such securities or property would have, all without
any authorizing or confirming order or orders of court or notice or other
formalities and without the consent of the beneficiary of the trust and
notwithstanding any provisions of the laws or regulations of any state or of
the United States of America, statutory or otherwise, in that respect.
Id. Item IX, Clause 5(d), at 12. And, the Lilly Will provided:
The Trustee is specifically authorized to hold and retain and to invest and
reinvest the property of the trust in such securities, including the stock of
the Trustee Bank, or the stock of any other corporation owning the stock of
said Bank, or other real or personal property, including common and
preferred stocks and investment trusts, as the Trustee shall determine,
without the consent of any beneficiary and without any authorizing order of
court, notwithstanding any regulation, statutory or otherwise, respecting
legal investments of trust funds.
Id., Item IX, Clause 5(c), at 12. The Church understood “that it had no legal right or
authority to make investment decisions on behalf of the Trusts, and it could not terminate
[a] trusteeship.” Compl. ¶ 82.
Moreover, the Lilly Will stated that “the Trustee shall not be liable for any losses
which may be sustained or shrinkages in value which may occur in the administration of
the trust except in the event of a willful breach of trust.” Id., Item IX, Clause 5(a) at 12.

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Through a series of mergers, by July 1999, Bank One Trust Company N.A. (“Bank
One”) had become Trustee of two of the Trusts, which are the Trusts at issue herein. Dkt.
No. 1-2, Order Granting Joint Petition for Instruction as to Construction of Trust Instrument
(“Trust Order”), at 1. Although as originally written the Trusts provided for distributions
only of income to the Church, in July 1999, the Marion County Probate Court modified the
Trusts to permit the Church to receive distributions of “realized and unrealized net
appreciation in value of the Trusts’ assets, as well as from income.” Dkt. No. 1-2, Trust
Order at 2. In accordance with the Trust Order, the Church became entitled to receive
annual distributions equal to 5% of the aggregate value of the Trusts’ assets. Id. The
amount increased to 6% in years in which the Standard & Poor’s 500 Index or the
Consumer Price Index for All Urban Consumers showed that the economy had
underperformed. Id. at 3.
Although the Church had no investment decision making authority, it monitored the
Trusts’ assets closely and constantly. The Church’s Investment Committee reviewed the
Trusts’ asset allocations and performance. Compl. ¶ 71. The Church assessed the
Trusts’ performance in comparison to what the Church considered appropriate
benchmarks. Id. The Church also employed “independent experts and consultants” in
addition to its Investment Committee to “advise [it] on the investments.” Id. ¶¶ 74-76, 97.
In July 2004, Chase became the successor trustee of the Trusts when it merged
with Bank One. Compl. ¶ 77. During the period between July 2004 and late 2007, Chase
made very few changes to the investment portfolio of the Trusts, which consisted largely
of equities and bonds. Id. ¶¶ 77-80.

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On September 17, 2007, Chase representatives met with the Church to introduce
it to certain financial products that Chase intended to purchase for the Trusts and opined
about the significant opportunities to invest in structured notes, derivatives, and hedge
funds. Id. ¶¶ 92-96. Between September 2007 and December 2013, Chase created,
offered, sold to, and purchased for the Trusts: (a) eighty-eight structured notes where
Chase 1 was the sole placement agent; (b) nine off-shore hedge funds all created by
Chase; (c) two Chase created off-shore private equity funds committing $1 million of Trust
funds; (d) two losing hedge funds sold by a Chase acquired subsidiary, Highbridge Capital
Management; and (e) twenty-five other Chase proprietary mutual funds including funds
that not only caused the Trust to lose a substantial amount of money but were dissolved
based upon their poor performance and Chase’s inability to sell them to non-captive
intelligent investors. Id. ¶¶ 10-23.
Indeed, the Church alleges that Chase’s selection of certain investments “[o]ver
the last few months of 2007 . . . made little sense to the Church’s Investment Committee,”
and that “[t]he portfolio was unnecessarily over-diversified, illogical, and not consistent
with a coordinated investment strategy.” Id. ¶¶ 109-110. Further, the Church “was
concerned over the bank’s objectivity” in 2008 as Chase invested the Trusts’ assets in
hedge funds, structured notes, and “JPMorgan proprietary funds” that the Church felt
were “higher-fee funds.” Id. ¶ 112. The Church claims that Chase and Parent, as well as
other Parent subsidiaries profited from the sale of these financial products to the Trusts.
Id. ¶¶ 45, 125, 207-14.

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From this point forward in the allegations, references to “Chase” refer to the Church’s
usage of “JPMorgan” in the Complaint, which it defines to include Defendants “and
multiple JPMorgan subsidiaries and affiliates.”
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The Church also asserts that Chase designed a plan to encourage its employees
to steer clients to Chase proprietary products manufactured and created by Chase. Id.
at 187-92. Specifically, Chase allegedly pressured its sales advisors to sell the products
and created scorecards that it provided to investment sales staff highlighting the financial
products they should guide their clients to purchase. Id. at 192-99. This plan was
concealed from the Church. Id. at 200.
The Church avers that the 88 structured notes sold to the Trusts were impossible
to understand or monitor, not transparent, not marketable, high risk and have been the
subject of warnings issued by the Securities and Exchange Commission (“SEC”). Id. at
100-03, 201-05. Further, according to the Church these structured notes are often subject
to retrocession agreements (i.e. kick-backs from the issuers to the placement agent such
as Chase). Id. at 104-07.
With respect to the nine hedge funds that Chase bought in the Trusts, Chase itself
created each off-shore fund or funds of funds that was managed and administered by
JPMorgan Private Investments, Inc.

Id. ¶¶ 112-25.

Unbeknownst to the Church,

JPMorgan Securities LLC was a “special limited partner” in some of the funds. Id. ¶ 123.
Around 2004, Chase purchased the majority interest in Highbridge Capital
Management; it owned the entire company by 2009. Id. ¶¶ 215-17. According to the
Complaint, it turned out to be a bad investment for Chase and Chase’s trust clients. Id. ¶
219. Independent investors were selling off their interests because of poor performance,
but allegedly Chase kept some of the funds alive by “forcing its clients” to purchase them.
Id. ¶¶ 218-19. The Church avers that $1.844 million of the Trusts’ monies were tied up
in two Highbridge funds for 2.5 years during which time the Trust lost $95,000.00 in

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principal. Id. ¶¶ 221-23. The Church alleges that multiple proprietary mutual funds
purchased in the Trusts were doomed for failure as well and led to losses of $781,000.00
from three funds that were ultimately dissolved. Id. ¶¶ 111, 207-14.
The Church also asserts that “[b]y the end of 2008, the Trusts’ portfolio had
decreased to $26.9 million from $39.2 million in December 2007, a loss in value of $13.5
million while [Chase’s] disclosed annual fee had doubled in size.” Id. ¶ 125. However,
by the Church’s own calculations, the principle value of the Trusts increased from
$26,693,524.08 at the end of 2008 to $31,657,324.17 by the end of 2013, an increase of
almost $5 million over and above the millions that the Church received in distributions
during the period. Dkt. No. 1-3, Total Estimated Year-End Values.
In 2011 and 2012, the Church questioned Chase about the total revenues it was
receiving from the investment products in the Trusts’ portfolio including revenues received
by any Chase entity. Compl. ¶ 152. The Church received limited explanations of fees
and carefully worded explanations relating only to a portion of the fees and costs received
by Chase alone, not other JPMorgan entities. Id. ¶¶ 18, 152-54.
In January and February 2012, Chase sold two private equity fund financial
products to the Trusts, committing $1 million in two high-risk, high-cost, illiquid private
equity conduit funds created by Chase that obligate the Trusts to continue to pay monies
to the funds until at least 2023. Id. ¶ 155. The Church claims that Chase concealed
significant information from it relating to these two products including offering memoranda
and the subscription agreements. Id. ¶¶ 163, 166, 169. On March 8, 2012, Chase sent
a letter to the Church that welcomed the Church as an investor in “KKR NS XI Private
Investments, Inc.” (“KKR”). Id. ¶ 162; Dkt. No. 1-6, KKR Welcome Letter. The signature

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page of the subscription agreement was the only page attached to the letter. Id. The
Church alleges that the agreement binds the Church Trusts to a $500,000.00 commitment
and additional substantial fees that would be paid to Chase until 2023. Dkt. No. 106, KKR
Welcome Letter.
The signature page of the subscription agreement identifies “Matthew Crenshaw,
Portfolio Manager” as the signatory on behalf of the “Limited Partner (Investor),” the
Trusts. Compl. ¶ 165. The Church asserts that the signature appears to be computergenerated. Id. ¶ 164. By signing, Crenshaw claimed that the Trusts had read and
understood the subscription agreement and its multiple warnings. Id. ¶ 165. Further, the
signature page represents, “The undersigned is not an employee or director of J.P.
Morgan or the spouse, domestic partner, minor child and/or financial dependent of an
employee of director (a ‘Related Person’).” Dkt. No. 1-6, KKR Welcome Letter, at 2. The
signatory on behalf of KKR was the Vice President of Global Funds Structuring, “J.P.
Morgan Private Investments Inc.” as administrator. Id.
According to the Church, Chase reported that from 2004 through 2013, its net
revenues increased from $43 to $96.6 billion and its assets grew $1.4 trillion in additional
value. Id. ¶ 21. According to a 2014 corporate overview to shareholders, Chase earned
$1.1 billion in revenues from cross-selling its proprietary products to its clients. Id. ¶ 22.
According to the Complaint, Chase made more money on some financial products sold
to the Trusts than did the Trusts. Id. ¶¶ 19, 205, 214, 223.

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III. DISCUSSION
A. CONSTRUCTIVE FRAUD
Defendants argue that the Church has failed to plead its constructive fraud claim
with the particularity required by Rule 9(b) and should be dismissed. Dkt. No. 16, at 2229. 2

Specifically, the Complaint generically refers to “JPMorgan” or a “JPMorgan

representative” making statements without identifying either the specific entity or a
particular person who made the representation. Id. at 24. Similarly, the Complaint also
alleges that statements were made to the “Church” or the “Investment Committee” without
specifically identifying the recipient of the information. Id. Defendants also aver that the
Complaint does not allege that any statements made to the Church were false or
misleading or that the unidentified speakers did not believe that their statements were
true or did not intend to take actions consistent with the statements. Id. at 24-25; Dkt. No.
30 at 18-20. Further, Defendants contend that the Church concedes in the Complaint
that it had no legal right or authority to make investment decisions on behalf of the Trusts
and could not terminate the trusteeship, which forecloses any argument that the Church
relied on the Trustee to make investment decisions. Dkt. No. 30 at 14-20.
In response, the Church outlines its investigation of the alleged activities of the
Trustee, asserting that the documents reveal that the Parent required local
representatives to use scorecards and lists to make investment decisions rather than
analysis. Dkt. No. 26 at 18-19. Further, the investigation revealed that Chase was under
investigation by the SEC and the Office of the Comptroller of Currency (“OCC”) for

2

All page numbers refer to the ECF page number in the upper right-hand corner of the
referenced document.
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steering clients to JPMorgan proprietary products and that the practice was criticized by
others in the industry. Id. at 19-20. In addition, the Parent’s annual reports for 2004
through 2014 revealed that its revenues for cross-selling of its own proprietary products
made up for losses of revenue in its traditional banking business. Id. at 20. The Church
claims it asked for, but never received, information regarding any risk analysis, audits and
suitability reviews of financial products sold to the Trusts. Id. at 20.
The Church contends that it has sufficiently alleged the existence of a fiduciary
relationship and a scheme to defraud; therefore, reliance is presumed as a matter of law.
Id. Further, the Church relied upon and was entitled to rely upon the Trustee and did so
to its detriment because Chase’s scheme “spanned multiple years involving a
complicated transfer of wealth from the Church Trusts to [Chase].” Id. See also id. at 21
(discussing the fiduciary relationship and presumption of fraud); id. at 22 (discussing
presumed reliance). The Church claims that Chase, “as Trustee, advised the Church that
it fully understood its legal duties to act in the Church’s best interests.” Complaint ¶¶ 8687. “At no time[] did JPMorgan advise the [C]hurch of its massive scheme to defraud
which is set forth in great detail through the Complaint.” Dkt. No. 26 at 22. Finally, the
Church asserts that the law recognizes that a beneficiary is entitled to and must rely upon
a trustee; therefore, it can state a claim for constructive fraud. Id. at 22-23 (citing Wilbur
v. Keybank Nat’l Ass’n, 962 F. Supp. 1122, 1129 (N.D. Ind. 1997); Malachowski v. Bank
One, 570 N.E.2d 65, 69 (Ind. Ct. App. 1991)).
To prove constructive fraud, the Church must show the existence of a duty owed
by each of the Defendants to the Church because of their relationship, and that each of
the Defendants gained an advantage. See Morfin v. Estate of Martinez, 831 N.E.2d 791,

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802 (Ind. Ct. App. 2005). The duty may be shown by some fiduciary relationship. Id. If
the Church evidences those two elements by a preponderance of the evidence, then a
presumption of fraud arises regarding the challenged transactions. Id. Defendants may
overcome that presumption by showing by clear and unequivocal evidence one of the
following: (1) that it made no deceptive material misrepresentations of past or existing
fact or did not remain silent when a duty to speak existed; or (2) the Church did not rely
on any such misrepresentation or silence; or (3) no injury proximately resulted from the
misrepresentation or silence. Id.
The Court concludes that the Church has not stated its constructive fraud claim
with enough particularity.

At the outset of the Complaint, the Church recites the

relationship between the Parent and Chase, but then lumps together both entities as well
as any other Parent-related entity. Compl. ¶ 6. This is problematic because there is no
allegation that the Court should pierce the corporate veil and treat any and all Parentrelated entity as the Parent itself or vis-a-versa. Further, it is unclear in the Complaint if
the “JPMorgan employee” or “JPMorgan employees” who met with “Church
representatives” at various times owed a fiduciary duty to the Church. In addition, there
are specific allegations of potential mismanagement, however, there are no specifics as
to the “who,” which is the only way that the Court or Defendants can ascertain whether
there is a factual basis for the “duty owed” element of the constructive fraud claim. See,
e.g., Compl. ¶¶ 128-31. Similarly, because the Church lumped Defendants together and
with other subsidiaries of Parent, there is no way to ascertain which entity reaped any
benefits from the alleged misrepresentations and/or omissions.

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Also missing are facts related to what decisions the Church made in reliance on
any alleged misrepresentation or material missing information that proximately resulted
in some injury to the Church. The Church admits that it had no investment authority over
the Trusts’ assets and could not take steps to terminate the trusteeship. Compl. ¶ 82.
However, the Complaint suggests that no JPMorgan entity manages the Trusts today, id.
¶¶ 173 & 176; therefore, there might be facts to support the reliance element, but they
must be plead with more particularity.
For these reasons, the Court GRANTS Defendants’ Motion to Dismiss the
Constructive Fraud claim WITHOUT PREJUDICE.
B. INDIANA SECURITIES ACT CLAIM
Defendants assert that the Complaint fails to state a claim under the ISA because
it fails to plead with the particularity required by Rule 9(b), Dkt. No. 16, at 22-29; and
because the Church admits that it had no authority over investment decisions. Id. at 1721. With respect to the Rule 9(b) requirement, Defendants argue that there are no specific
allegations of the who, when, when, where, why or how of the alleged fraud. Id. at 2425. Also with respect the Rule 9(b) requirement, Defendants claim that the Complaint
fails to explain how any allegedly omitted information rendered the information that the
Trustees provide to the Church misleading. Id. at 26-29. With respect to the Church’s
lack of authority to make purchases, Defendants argue that such an admission bars the
Church’s securities fraud claim because only purchasers and sellers of securities are
entitled to maintain actions for violation of securities law. Id. at 17-21.
The Church argues that “JPMorgan” was the offeror, the seller and the purchaser
of securities in the Trusts that “it created as a part of its scheme and artifice to defraud

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for the purpose of surreptitiously transferring wealth from [the Church] to JPMorgan.” Dkt.
No. 26, at 24. The Church claims that such self-dealing is a defacto violation because a
trustee may not “unite the two opposite characters of buyer and seller.” Id. (citing Terre
Haute Trust Co. v. Scott, 181 N.E. 369, 374 (Ind. Ct. App. 1932), en banc). The Church
asserts that it has standing under the ISA because it has a beneficial interest in the Trusts
and because its money was used to make the allegedly fraudulent transfers. Id. at 2528.
The ISA states, in relevant parts:
It is unlawful for a person, in connection with the offer, sale, or purchase of
a security, directly or indirectly:
(1) to employ a device, scheme or artifice to defraud;
(2) to make an untrue statement of a material fact or to omit to state
a material fact necessary in order to make the statement made, in
light of the circumstances under which they were made, not
misleading; or
(3) to engage in an act, practice, or course of business that operates
or would operate as a fraud or deceit upon another person.
Ind. Code § 23-19-5-1. Further, the civil liability portion of the ISA provides:
(a) . . . a person is liable to the purchaser if the person sells a security in
violation of this article . . . .
(1) The purchaser may maintain an action to recover the
consideration paid for the security, less the amount of the income received
on the security and interest . . . , costs, and reasonable attorney’s fees
determined by the court or arbitrator. . . or for actual damages . . . .
(b) . . . a person is liable to the seller if the person buys a security in violation
of this article . . . .
(1) The seller may maintain an action to recover the security, and
any income received on the security, costs, and reasonable attorney’s fees
determined by the court or arbitrator, . . . or for actual damages . . . .

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Ind. Code § 23-19-5-9.
The Court agrees with Defendants that there is no critical difference between
federal securities statutes and the ISA with respect to the seller/purchaser requirements.
First, the Indiana Supreme Court has declared that the ISA “requires either privity
between the seller and purchaser, or that the person charged have offered the security
to the purchaser.” Kirchoff v. Selby, 703 N.E.2d 644, 650 (Ind. 1998). In other words, the
parties to a securities transaction have a cause of action. According to the admissions
by the Church in the Complaint, it is not a party to any of the allegedly fraudulent
transactions because it cannot make any investment decision with respect to the Trusts.
Compl. ¶ 82.
Further, the Indiana Supreme Court has suggested that reliance on cases
interpreting federal securities law may be helpful to interpret the ISA where the language
is similar. Lean v. Reed, 876 N.E.2d 1104, 1108-09 (Ind. 2007). The anti-fraud provision
of the federal statute, 15 U.S.C. § 78j (commonly known as “§ 10b”), like that in Indiana,
uses “in connection with” language to describe prohibited behavior. Compare Ind. Code
§ 23-19-5-1 with 15 U.S.C. § 78j. In interpreting the “in conjunction with” language of §
10b, the Seventh Circuit has long held that only a buyer or seller of the securities has a
cause of action. See O’Brien v. Continental Ill. Nat’l Bank & Trust, 593 F.2d 54, 59-63
(7th Cir. 1979). An entity like a beneficiary that does not have investment decision-making
authority cannot bring a claim under the anti-fraud provision of the federal securities laws
because the purpose of the federal securities regulations is to ensure full disclosure with
respect to transactions; it is not to protect those who have entrusted such decision making

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to others. Id. at 60. According to the O’Brien court, a breach of fiduciary duty or breach
of contract claim is the proper avenue to pursue redress in such cases. Id. at 63.
Applying this analysis to the ISA, the language of the remedy provision taken in
conjunction with that of the anti-fraud provision evidences that it the legislation is directed
to buyers and sellers, not beneficiaries that are strangers to the decision of whether to
buy or sell. The remedy provision is specific as to when a buyer or a seller may recover;
never once does it mention a person with a non-decision making beneficial interest. Ind.
Code § 23-19-5-9.

Further, the anti-fraud provision prohibits misrepresentations of

information and other fraudulent activity “in conjunction with” a transaction, which
necessarily would include an offer, a seller and an investor. Ind. Code § 23-19-5-1. The
Church cannot allege that it was involved in any transaction in any way because it admits
it has no investment authority with respect to the Trusts; therefore, it cannot state a cause
of action under Indiana Code § 23-19-5-1.
For these reasons, the Court GRANTS Defendants’ Motion to Dismiss Count II of
the Complaint brought pursuant to the ISA; Count II is DISMISSED WITH PREJUDICE.
C. CLAIMS AGAINST PARENT
As set forth in Section III.A. above, the Church has lumped multiple entities
together in the Complaint as to nearly all allegations. Because it is impossible to tell which
entity owes any duty to the Church and which entity was specifically involved in alleged
self-dealing or made misrepresentations or omission, Parent’s motion to dismiss on that
alternative ground is GRANTED, but WITHOUT PREJUDICE.

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IV. CONCLUSION
For the reasons stated herein, the Court GRANTS Defendants JPMorgan Chase
and Company’s and JPMorgan Chase Bank, N.A.’s, Motion to Dismiss, with leave to replead certain Counts:

Count I is DISMISSED WITHOUT PREJUDICE as to both

Defendants, with leave to re-plead; Count II is DISMISSED WITHOUT PREJUDICE
as to JPMorgan Chase and Company only, with leave to re-plead; Count III is
DISMISSED WITH PREJUDICE. Plaintiffs, The Rector, Wardens and Vestrymen of
Christ Church Cathedral of Indianapolis, have 28 days from the date of this Order to file
an Amended Complaint. Partial judgment shall not issue at this time.
IT IS SO ORDERED this 21st day of May, 2015.

________________________________
LARRY J. McKINNEY, JUDGE
United States District Court
Southern District of Indiana
Distribution:
David K. Herzog
FAEGRE BAKER DANIELS LLP - Indianapolis
[e-mail]

David J. Hensel
PENCE HENSEL LLC
[e-mail]

Katrina Michelle Gossett
FAEGRE BAKER DANIELS LLP - Indianapolis
[e-mail]

Julie L. Smith
PENCE HENSEL LLC
[e-mail]

Paul A. Wolfla
FAEGRE BAKER DANIELS LLP - Indianapolis
[e-mail]

Linda L. Pence
PENCE HENSEL LLC
[e-mail]

Sarah Jenkins
FAEGRE BAKER DANIELS LLP - Indianapolis
[e-mail]

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